When the Price Level Is Rising and Simultaneously Real GDP

question 335

Multiple Choice

When the price level is rising and simultaneously real GDP is decreasing,

• A) stagflation occurs.
• B) the Fed has increased the discount rate.
• C) there is an expansionary gap.
• D) the natural unemployment rate increases.

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Definitions:

Librium

A brand name for chlordiazepoxide, a sedative and hypnotic medication used in the treatment of anxiety disorders and withdrawal symptoms.

Sterile Solution

A liquid free from any living microorganisms, used in medical contexts to prevent infection.

Ears

Organs of hearing and balance in humans and other animals, responsible for receiving and processing sound waves.

Nose

A part of the face that contains the nostrils and is used for breathing and smelling.